[AlDonSseulJob] Even with Falling Interest Rates, Money Pours into Parking Accounts... 11 Trillion Won in One Month from Funds Unable to Find Investment Destinations

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This year, as we have entered a full-fledged interest rate cut phase,

the interest rates on savings and time deposits are dropping sharply day by day.

The current interest rates on savings and time deposits at commercial banks are only around 2-3%.

Parking account interest rates are no exception.

Nowadays, it is hard to find parking accounts with top interest rates even in the 3% range,

yet large sums of money are still flowing into parking accounts (demand deposit savings accounts).

Let's find out how this is happening.

Parking Account Average Interest Rate in the 2% Range... Savings Enthusiasts Lost Their Way

According to the Korea Federation of Banks, as of the 18th, the average interest rate of 39 parking accounts sold nationwide was 2.03% per annum.

Excluding Kakao Bank's 'Jeogeumtong' and K Bank's 'Moimb Plus', which offer up to 8% interest annually, the average is only 1%.

The deposit interest rates at commercial banks are not much different.

Among the five major commercial banks,

NH Nonghyup Bank's 'NH1934 Preferential Account', boasting the highest interest rate (including preferential rates),

also has a top interest rate of only around 3%.

Typically, savings banks offer higher interest rates than first-tier banks.

However, savings banks have also been lowering their rates recently.

This is because demand has shifted to savings banks seeking slightly higher rates,

removing the incentive to attract customers with high interest rates.

In fact, Shinhan Savings Bank lowered the interest rate for amounts under 10 million KRW on its 'Chamshinhan Parking Account' from 3.1% to 3.0%, a 0.1 percentage point decrease.

IBK Savings Bank also reduced the interest rate for amounts under 10 million KRW on its 'IBKSB e-Parking Account' from 3.2% to 3.1%, a 0.1 percentage point cut.

Parking Account Interest Rate Appeal Drops... Yet Large Sums Still Flow In

According to the 'November 2024 Monetary and Liquidity' statistics released by the Bank of Korea on the 14th, the M2 (broad money, average balance) in circulation in November 2024 was 4143 trillion KRW, an increase of 32.3 trillion KRW from the previous month.

M2 is a broad monetary indicator that includes narrow money (M1) such as cash, demand deposits, and demand savings deposits, as well as financial products like money market funds, time deposits under two years, beneficiary certificates, and repurchase agreements (RP). It generally represents the amount of money circulating in the market.

In particular, a whopping 11.4 trillion KRW flowed into demand savings deposits (parking accounts) alone.

This is an analysis that investment standby funds have increased due to increased volatility in asset markets.

Additionally, time deposits and savings also showed an increase of 5.2 trillion KRW, marking the 10th consecutive month of growth.

Although the Bank of Korea's Monetary Policy Committee (MPC) held rates steady on the 16th, the Bank of Korea has signaled further base rate cuts this year,

so deposit and savings interest rates at banks are expected to fall further for the time being.

As the Bank of Korea has indicated several more rate cuts this year,

there is an assessment that we have entered a full-fledged interest rate cut phase,

and the attractiveness of savings and time deposit interest rates is declining.

Usually, when liquidity is abundant in the market, it flows into stocks or real estate,

but the real estate market is frozen solid,

and due to domestic and international instability, asset markets are more volatile,

so large sums of money are instead flowing into banks.

This year, especially with the inauguration of the Trump administration's second term, the domestic and international economic environment is expected to be even darker.

Remembering that there is always opportunity even in crisis situations,

it would be good to always pay attention to where the money is flowing.

Thank you to all readers for reading today as well.

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